St. Joseph Health System is putting a new twist on an old job at its leadership level.
Last month, the Orange-based hospital operator appointed longtime executive Darrin Montalvo as regional executive vice president for Southern California.
The heads of St. Joseph’s various businesses in the region—including four hospitals in Orange County, another in Apple Valley, and several other entities—now report to Montalvo.
“I’ve always been an advocate that healthcare is local, but we started seeing an opportunity to more fully align our region,” Montalvo said. “I see my role as setting the strategic vision for the region.”
St. Joseph Health System has annual revenue of more than $4.2 billion and 14 hospitals in Southern California, Northern California and Texas. It’s established a similar regional approach in its other two regions.
The elevation of Montalvo to oversee Southern California follows turnover in its local executive ranks over the past year.
Last year, Larry Ainsworth retired after 16 years as chief executive of St. Joseph Hospital-Orange.
Peter Bastone stepped down as chief executive of Mission Hospital in Mission Viejo two months ago to pursue other opportunities.
Steve Moreau, a former chief operating officer at Hoag Memorial Hospital Presby-terian in Newport Beach, replaced Ainsworth at St. Joseph-Orange last December.
Ken McFarland, Mission’s chief financial officer, is serving as that hospital’s interim head as a search for Bastone’s permanent replacement is under way.
Joe Randolph went from chief operating officer to running St. Joseph’s Institute for Innovation, which is charged with looking at other types of healthcare businesses.
In addition to Moreau and McFarland, the roster includes Lee Penrose, chief executive of St. Jude Medical Center in Fullerton; Michael Beck, a vice president who oversees day-to-day operations at Mission Hospital Laguna; and C.R. Burke, who runs the St. Joseph Medical Practice Foundation, an affiliated medical group.
St. Joseph’s geographic spread over distinct regions led to the new structure, according to Montalvo.
Reworking
St. Joseph Chief Executive Deborah Proctor said Montalvo’s position is the reworking of a prior management structure.
“I had a chief operating officer,” Proctor said, referring to Randolph’s former post. “What I did was take that role away and replace that with regional positions, so it isn’t like adding a new position; it’s just a restructuring.”
The reworking is part of a larger goal “to transform ourselves into an organization focused on health and wellness, as well as caring for people who are ill,” Proctor said. “We felt that how we would do that might vary from region to region.”
Proctor said top executives of the four hospitals here will maintain day-to-day leadership.
“This is not to replace the individual hospital CEOs,” she said. “This is to help think about how to work together across the entire county and strengthen services.”
Penrose Backs Change
One of the local executives, Penrose, endorsed the change in a statement. He said he expects the regional approach to improve and ensure consistent clinical quality across St. Joseph’s Orange County hospitals.
Penrose drew a parallel to moves the local hospitals have made in the past two years to integrate stroke and breast healthcare.
Montalvo said he believes the hospitals’ top executives will adapt to the change because the new structure gives them a voice in decisions about the entire operation in addition to their individual hospitals.
“When I’m out recruiting for a CEO, I explain to them that you’re responsible for your local ministry, but we’ll also involve you in decision making for the system,” he said. “That will continue.”
St. Joseph dates to the 1920s, when the Sisters of St. Joseph of Orange started a hospital in Northern California. The nuns’ vision—“the healing mission of Jesus”—guides the corporate culture of St. Joseph today, according to officials.
Healthcare reform only had a mild role in the recent changes on executives, according to Proctor and Montalvo.
“You have to be aware of what the environment is that you’re delivering care in,” Proctor said.
Montalvo said the planning for the restructuring started about two years ago.
“It takes us back post-economic crisis, pre-healthcare reform,” he said.
Proctor said she didn’t seek out models at other hospitals when she decided to create the regional structures. She instead relied on her own team to figure the change.
“I felt we had the folks who knew our market,” she said.
Proctor said that she felt it would be risky to hire an outsider who might want to run the individual hospitals rather than work with their top executives.
Wearing Two Hats
In the meantime, Montalvo is wearing two hats, still serving as the system’s chief financial officer.
“I’m going to hold the role until a replacement is here,” he said. “We’re going to kick off the recruitment.”
The search for a CFO is expected to begin in earnest next month with a review of internal and outside candidates.
“Right now, I have the longest title in the world—EVP Southern California and chief financial officer,” Montalvo said.
